Internet’s deep trade connection

Failure to embrace technology is often borne out of an inability to see past the immediate impacts and toward an ultimately more efficient future.

Breaking news: the Internet is important to international trade.
That statement comes as a result of attending a panel at a think tank in Washington, D.C. in early February where a cast of economic and technology experts examined the role of the Internet as a platform for expanding cross-border commerce, especially for and into developing nations.
Pardon my flippancy, and I certainly don’t want to seem ungrateful for the invite to the event, but I wasn’t sure we were still at the point where we needed to explain the usefulness (strike that, irreplaceable-ness) of the Internet as a component of global trade.
I certainly hadn’t planned on writing a piece this month justifying the existence of the Internet. There’s hardly an issue of American Shipper that goes by without an article or two explaining just how reliant trading partners have become on systems that are structured around the Internet.
Yet the fact this event occurred – and it was spurred by a solid piece of research from Brookings fellow Joshua Meltzer (Supporting the Internet as a Platform for International Trade) – suggests that maybe things aren’t as straightforward as I thought them to be.
The Internet has become such a given in our lives, so taken for granted, that we sometimes fail to recognize it needs to be researched, and policy needs to be built around it to ensure it continues to be a force for economic growth. In some sense, the Internet is a ship far out at sea in the middle of the night. And without a compass, you’d literally have no idea where that ship is.
Again, I doubt I have to tell anyone reading this column about the importance of the Internet in the world of global trade. After all, some of you may be reading the e-version of this. Others will be using a browser-based tool to automate transportation management or trade compliance. Most will be sending critical data and documents across borders, either to internal parties in other countries, or external supply chain partners.
All of this does not exist without the Web. We’ve spoken often at conferences and during webinars about how the Internet has empowered software vendors and 3PLs to create systems that stitch together entire groups that previously never communicated. And the Internet is at the core of that evolution.
Yet the Brookings event was just as much about equalizing the penetration rates of Internet usage in both the industrialized and developing worlds than it was about linking trading partners.
Robert Atkinson, founder of the Information Technology and Innovation Foundation, said the greatest contribution the Internet has made to commerce is scale. Whereas it was once postulated that the Internet would empower scores of small businesses to grow as they gained access to larger markets, Atkinson took a contrary view. He said the Internet, at its most useful, allows large companies to significantly grow their scale, and by any measure, those large companies are more productive and more economically beneficial than small companies.
The fact that many developing nations have not yet figured out how to fully leverage the Internet perpetuates economies dependent on the less productive smaller businesses, he said.
Also pertinent were comments made by Peter Allgeier, president of the Coalition of Service Industries. Allgeier spoke about the need to ensure that cross-border information flows were not interrupted by unilateral policy decisions. He pointed to three ongoing trade negotiations (the Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership, and the Trade in Services Agreement) as potentially defining on a global basis how data will flow across different countries.
A third panelist, World Bank economist Deepak Mishra, talked about how Internet penetration in the developing world lagged the industrialized world in a way that hadn’t happened following the introduction of previous sea change technologies. For instance, use of steamships and trains, and then later electricity, spread in a comparatively faster timeframe.
All deep stuff, and ideas I would have missed had I not attended on the basis that “the Internet is important – no kidding.”
As they spoke, I wondered how this translated more directly to the transportation, logistics, and compliance worlds. We seemingly write everyday about the need to smartly incorporate automation into business practices.
And as some of the panelists focused on how the developing world was eschewing the chance to leverage the Internet’s power in lieu of throwing people at commerce processes, I started to think “that sure sounds like our industry.”
Where a system might eliminate the need for compliance personnel to pour over spreadsheets from different departments in different countries, many companies choose to throw people at the problem. Where transportation procurement can be automated, many companies throw people at the problem.
Atkinson pointed to the fact that some governments – even some massive corporations – in the developing world see the Internet as a threat to the country’s employment base. But he said research has shown time and again that using technology doesn’t put workers on the streets, it makes economies run more smoothly, and grows employment.
We’ve certainly seen many examples in our industry of companies, unions, and governments grasping at the idea that technology will forever replace them. It might be longshore unions battling against automation efforts in container terminals, or a compliance staffer wanting to preserve his or her spreadsheet-based tasks for fear of being let go.
Atkinson said it doesn’t work like that, and the developing world needs to see past the “first order” benefits of technology to the “second order” and beyond.
The same can be said about parts of the logistics and trade community – failure to embrace technology is often borne out of an inability to see past the immediate impacts and toward an ultimately more efficient future.